The foundations of Indian economics

Front matter

BOOK NO. ACCESSION

BY

RADHAKAMAL MUKERJEE, M.A.

Book I The Social Environment

CHAPTER PAGE

I. The Economic Transformation of Rural India . . 3

II. Conservative Elements in the Economic Order . . 11

III. The Family as the Economic Unit . 15

IV. Caste as an Economic Factor . 33

V. The Religious Element in Crafts and Industries . 47

VI. The Standard of Consumption . 56

VII. Retrospect and Forecast . 60

Book II The Cottage And Village Industries

I. Lac Culture and Manufacture . 65

II. Apiculture : Collection of Honey and Extraction

of Wax . 73

III. Bamboo Working and Basket Making . 78

IV. The Fishing Industry . 81

V. Dairying . 92

VI. Rice and Wheat Manufacture . 96

VII. Sugar Industry . 106

VIII. The Oil-pressing Industry . 125

IX. Pottery . 137

X. Carpentry . 148

XI. Handloom Weaving . . 152

XII. The Silk Industry . .

XXVI

CONTENTS

CHAPTER PAGE

XIII. Tassar and Endi Rearing and Weaving .... 198

XIV. Dyeing . 205

XV. The Leather Industry . 210

XVI. Soda Manufacture and Tinsel Industry .... 220

XVII. Bangle Making . 225

XVIII. Metal Work . 228

XIX. Building and Carving . 243

Book III Credit And Trade Systems

I. The Organization of Rural Credit . 265

II. The Organization of Rural Trade and Transport . 2S0

III. The Transition in Trade . 307

Book IV The Economic Progress Of India

I. Indian Industrialism and its Line of Evolution . 321

II. The Coming Change in Western Industrialism . . 333

III. The Industrial Problem of India (a) The Case for

the Factory Organization . 339

IV. The Industrial Problem of India ( continued ) (b) The

Case for the Workshop . 336

V. The Industrial Problem of India ( continued ) (c) The

Case for the Cottage Industry . 369

VI. Co-operation and the Cottage Industry .... 377

VII. Technical Education and the Cottage Industry . 392

VIII. The Restoration of the Village . . 400

IX. Co-operation and the Village Life . 418

X. The Ethics of Indian Industrialism, and its Lessons

for the West . 447

XI. Conclusion . 462

Index I. Subjects . 471

,, II. Proper Names and Literary References . 508

LIST OF ILLUSTRATIONS

1. The Bamboo Trap on the Margin of the River Frontispiece

FACING PAGE

2. Bamboo Weaving . .

3. Fishing in Mid-stream . 81

4. Fishing in Shallow Water . 86

5. Husking and Winnowing Grain . 97

6. Gur-making . xo8

7. Tapping the Date-palm . 122

8. Silk Industry . 173

9. Feeding Cocoons . 176

10. The Shoemakers at work . 212

11. Hammering the Utensil on the Anvil . 231

12. The Furnace : the Artisan pouring the Molten Fans a

into the Earthen Crucibles . 233

13. The Hand-lathe for Chiselling and Polishing : the

Artisan applying the Chisel to the Revolving Vessel . 234

14. Goldsmiths at work . 241

15. The Pheriwalah . 297

16. The Factory and the Slums . 416

ERRATA

Page 31,

line

For

“ Dom ”

read

“ Dome ”

“ Kolu ”

“ Kalu ■

“ Sayyied ”

“ Sayyid ”

“ output ”

“outfit”

“ creditors ”

“ debtors ”

“ kaby ”

“ kabis ”

“tea- ”

.» 9-

“ Native saddles . . . Bridles . . . Hide-ropes . . . Water-bags” should be read immediately following the articles enumerated at foot of page 210 and before “ Musical Instru¬ ments ”

For “ khilan ”

read

“ khiten ”

“ bellow ”

“bellows ”

“ curvings ”

“ carvings ”

“ curved”

“ carved ”

“ Juggannath ”

“ Jagannath ”

>3

“ bundh ”

“ bundhs ”

“ gomustas ”

S3

“ gumusthas ”

“ Export of rice

“ Export of rice and wheat ”

“ non-seasonable ” „

“ non-seasonal ”

“ ecuri ”

“ security ”

“ perquisites ”

“ requisites”

i

Chapter I The Economic Transformation Of Rural

INDIA

India is now in the throes of a great economic revolution. A contrast between city life and village life would show the fundamental character of this revolution. Rural India carries on the production, distribution, and consumption of wealth in a manner which is strikingly different from that of city India. The structure of rural society has hitherto rested, and is still resting to a certain extent on status, while the cities are rapidly coming under the sway of competition. Indeed, the economic ideas of the city are not only far removed, but in some cases are actually antagonistic to those of the village. The village is still almost self-sufficing, and is in itself an economic unit. The village agriculturist grows all the food necessary for the inhabitants of the village. The smith makes the ploughshares for the cultivator, and the few iron utensils required for the household. He supplies these to the people, but does not get money in return. He is recompensed by mutual services from his fellow villagers. The potter supplies him with pots, the weaver with cloth, and the oilman with oil. From the culti¬ vator each of these artisans receives his traditional share of grain. Thus almost all the economic

B 2 transactions are carried on without the use of money. To the villagers money is only a store of value, not a medium of exchange. When they happen to be rich in money, they hoard it either in coins or make ornaments made of gold and silver.

The village agriculturist possesses little capital. He lives from hand to mouth. The Banya supplies the cultivator with seeds, and charges an enormous interest.1 But the cultivator pays the interest un¬ grudgingly ; though he stoops under the heavy burden, he does not improve his position. There is no desire for a better, more comfortable living, both among the cultivators as well as among the artisans. The artisans follow their hereditary occupations. There is no competition, no stimulus for improvement, no change in customary wages. The industries are stereotyped ; the apprentice only tries to imitate his master, and rarely thinks of introducing new implements or new methods of manufacture. Thus the village communities are the most complete and the most contented in the world. Within their self-sufficing confines trade is no vulgar source of profit for which men scheme and strive, but a calling, often a holy calling, handed down from father to son through genera¬ tions, each with its own unchanging ideals, its zealously-guarded crafts.

But the village life is being transformed. The city sends to the village Manchester cloths, and

1 He is not altogether so despicable as many think him to be, for without his assistance agricultural operations cannot be carried on for a day in the village. The people are so poor that “ the Banya has often not only to forego the repayment of the loan for the time being, but even to feed his debtors in the bargain, in order to keep alive the hope of being paid in future.”

ECONOMIC TRANSFORMATION OF RURAL INDIA 5

these are replacing the cloths woven by its weavers. Not only weavers, but also other artisans are losing their occupations and turning to agriculture. The cheap kerosene oil from Baku or New York threatens the oilman’s existence. Brass and copper which have been used for vessels from time imme¬ morial are threatened by cheap enamelled ironware imported from Europe. The village sugar-cane is also in danger on account of the competition of imported sugar, which is sold at a very low price. The manufacture of sugar from gur (molasses) tends to become unremunerative. The demand for gur also falls off when the price of sugar is brought down by competition. There is also pari passu a transformation of the tastes of the consumers. They abandon gur for crystal sugar. Home- woven cloths are now replaced by manu¬ factured cloths for being too coarse. All local industries are attacked, and many have been de¬ stroyed. Villages that for centuries followed cus¬ tomary practices are brought into contact with the world’s market all on a sudden. For steamship and railways which have established the connection have been built in so short an interval as hardly to allow breathing time to the village which slum¬ bered so long under the dominion of custom. Thus the sudden introduction of competition into an economic unit which had from time immemorial followed custom has wrought a mighty change.

New economic ideas have now begun to in¬ fluence the minds of the villagers. In some of the villages the weavers and the blacksmiths have no doubt been compelled to leave their occupations on account of foreign competition, but more men are leaving their hereditary occupations of their own accord. All Brahmins are not priests now. Many, indeed, live according to the old ideals, and view the temptations and vices of the West in “ silent, deep disdain.” But a few of them who have felt the impulse of a new life have gone to the cities. Those who are intelligent become lawyers or government servants, and those who fail in the competition become petty clerks in railway or mercantile offices. The middle classes also leave their village and get scattered all over the country to earn a living. A writer1 thus laments the decline of villages in Bengal : “In days long gone by our villages vied with each other as to which had the best Sanskrit Pandits and the best To Is, which had the largest number of Durga Pujas and where the largest number of people of all castes were fed. The days are gone by when each village was proud of the products of its looms, of the hoes made by its blacksmiths, its jatras, and its Baroari poojaks. But where are those things now ? Echo answers where ? At day time you will find large and expensive build¬ ings either wholly unoccupied or in the occupation of a few old women. Is there a pestilence in the village ? Ah no ! for you will see the houses and huts of the peasantry full to overcrowding. It is the houses of the middle-class Bhadralokes that are wholly or partly unoccupied and that gives to the whole village the look of a deserted village.” Not only the middle class but the field labourers also have found their ancestral occupations not suffi¬ ciently paying and have felt the need of moving to other places. The Government public works, the

1 The Bengalee , August 2, 1901.

ECONOMIC TRANSFORMATION OF RURAL INDIA 7

factories, the tea, indigo, and coffee plantations, the mining operations, as well as the facilities for foreign emigration all tend to shake the old immobility of labour. As the Imperial Gazetteer writes, “ A com¬ parison of census returns of 1891 and 1901 shows that a considerable landless class is developing which involves economic danger, because the in¬ crease has been most marked in districts where the rural population is already congested or in pro¬ vinces in which there is a special liability to periodic famines. The ordinary agricultural labourers are employed on the land only during the busy seasons of the year and in slack times a few are attracted to large trade-centres for temporary work.”1 The attraction to towns and other trade centres increases as trade industries develop and this movement is accelerated in famine years. “ Agricultural labourers migrate from Bengal and the Central Provinces to Assam, from the United Provinces to Bengal, from Madras and Chittagong to Burmah ; and outside India to Ceylon, Mauritius, South Africa, British Guiana, and other colonies in search of agricultural and other employment.” In Madras, where emigra¬ tion has been comparatively easy, there is almost a chronic scarcity of labour. In some districts the agricultural operations have been much impeded and at times endangered by the constant and sudden desertion of agricultural labourers, who, after enter¬ ing into contract to cultivate the lands on certain conditions, emigrate to foreign parts without the slightest notice to their employers.2

1 Vol. iii., p. 2.

2 G. S. Iyer, “ Some Economic Aspects of British Rule in India,” p. 207.

There are also other great far-reaching effects of this migration of labour. There has been engendered an aversion from the parent plough and the workshop. The demand for labour, again, has withdrawn the most valuable and potential elements from society — the flower of the agricul¬ tural population and rural artisans — so that not only agriculture but the handicrafts also suffer. The production of cereals has diminished a great deal while the foreign exports have a continuous ten¬ dency to increase. The village market is no longer isolated ; the demand for food in any part of India tends also to affect it. The population has in¬ creased and the standard of living has also become higher. The coolie emigrants or the middle class who return to the villages bring with them good savings and live on better fare than they were con¬ tent with before they emigrated. The increased demand for food is, however, unaccompanied by an increased out-turn of agricultural produce. The price of food-stufifs has consequently risen by 32 per cent. The exodus to towns is still going on at an alarming rate, the towns still continue to offer easy employment to the middle classes and labourers and ready markets for the products of the village artisans. They offer high material prospects to the ambitious, and in general provide all the mechanical facilities and pleasures of life to satisfy those whose standard of life has suddenly been raised. The landlords pass their lives amid the luxuries of the towns, and lose touch with their tenants. The sturdy cultivators become domestic servants, and the middle-class independent bhadralokes be¬ come clerks in mercantile offices and Government

ECONOMIC TRANSFORMATION OF RURAL INDIA 9

establishments. Thus the villages are all deserted and left as wastes and become prey to malaria. Paternal estates, tanks and orchards which have been handed down from generation to generation are left to decay. The cattle gradually deteriorate in quality. Milk and dairy produce become gradually scarce, and pisciculture and horticulture become unknown. The movement of the population from the village to the city is in fact not only working a complete revolution in the habits and ideals of our people, but its economic consequences are far more serious than are ordinarily supposed. It has made our middle class helplessly subservient to employment and service, and has also killed the independence of our peasant proprietor. It has jeopardized our food supply, and is fraught with the gravest peril not only to our handicrafts but also to our national industry, agriculture.

Another important change brought about in our rural industrial life is the introduction of money-economy. This has been a slow process, and brought about by various causes. The railways have destroyed the economic self-sufficiency of the village. They have created wants which were unknown before. The commodities which are thus introduced into the social economy of the village cannot be made by village artisans. Thus there grows a class of middle-men and intermediaries. At first they are peripatetic, like the Kabulis and Marwaris, who come from up-country. They will sell the commodities only for money in cash, for they cannot stay in the village waiting for a quantity of grain at harvest time. Thus these itinerant dealers who come to the village occasionally with

IO THE FOUNDATIONS OF INDIAN ECONOMICS

their assortment of imported goods encourage the system of money-economy. There are also other causes of the introduction of money. The villagers who go to the cities and other trade centres for service and employment are paid in kind and not in money. When they return to the village, they come with ready money in their hands. Again, the steady and continued rise in prices of the necessities of life which has been a characteristic feature of the recent economic history of the country has put the cultivating classes in possession of an amount of ready money which they never possessed before. In those tracts of the country especially where raw materials for exports, such as jute, cotton, oil-seeds, are grown, the agents of the European exporting firms offer cash advances to the peasants, and make them more or less independent of the village money-lenders, who lend seeds and recover their advances in kind, and who are thus instrumental in conserving barter-economy. The substitution of the gumustha or clerk of the exporting firm for the village mahajan, indeed, marks a stage in the tran¬ sition from barter-economy to money-economy. With these economic causes is combined an ad¬ ministrative necessity. The system of collecting the revenue in cash is perhaps the most powerful cause of the substitution of money for barter in Indian villages.

Chapter II Conservative Elements In The Economic

ORDER

Thus there have been in operation several forces which tend to profoundly affect the old Indian social economy. But the new economic ideas and practices which are being introduced into the social organization of India have not as yet been able to produce their full effects.

Let us first study some facts about the rural exodus which has been considered as one of the important phases of the social transformation. In spite of the attraction to towns the people as a mass still live in villages. Of India more than any other country it can be said that the nation lives in the cottage. Nearly 85 per cent, of the total population live in the country. There are only 2150 towns in the whole of India possessing not less than 5000 persons. Even these towns are aggregations of villages not greatly differing from single villages. There are 190 towns in Bengal which contain only 5 per cent, of the population. The villages make up the remaining ninety-five. The number of vil¬ lages in Bengal is about 203,658, counting each so-called town as only an overgrown village. Of these 1 65,305 contain under 2000 souls, and 3066 over 3000. Migration or emigration has worked hitherto on such a stnall scale in India as a whole that little relief has been given either to congested or to sparsely populated districts.1 The Indian peasant clings to the neighbourhood of his own home, however much it may be over-crowded. Again, “the movement between different parts of India is usually of a temporary nature, and does not involve a permanent change in residence.” Statistics show that over 90 per cent, of the inhabitants of every district were born in that district, 6 per cent, were born in the districts immediately adjoining it, and only 3 per cent, come from more distant places. Thus the self-sufficing isolated village is still the real unit of the Indian social life. The number of landless labourers who are employed in mills and factories is exceedingly small as compared with the total industrial population of our country. In the Punjab, where a great deal of land has been brought under canal irrigation within recent years, and has been colonized by people from thickly in¬ habited tracts, the census returns show only 360,000 labourers and more than 10,000,000 landowners and tenants. Large industries have been estab¬ lished, but the supply of labour has been found to be inadequate. The tea-gardens of Assam are worked, though less and less so as time goes on, by coolies recruited under a system of State-aided and State-supervised emigration under the Inland Emi¬ gration Acts. The stream of emigrant coolies that used to be poured out to the British colonies under the system of State-aided emigration is now almost counter-balanced by the coolies who return to India.2 The factories are suffering from the inadequacy in

1 Imperial Gazetteer , vol. iii., p. 2.

2 See G. S. Iyer’s “ Economic Aspects of British Rule in India.”

CONSERVA TIVE ELEMENTS IN ECONOMIC ORDER 13

the supply of labour. The deficiency has seriously restricted their productive capacity.1 The fact is that the Indian labourer is quite reluctant to leave his native village. When, however, he does leave his village to work in the factories, he does not leave it for good, but he tries to return as soon as he can. As the Report of Factory Commission, 1908, says, “The Indian factory hand is primarily an agriculturist. His real home is in his native village , not in the city where he works. He leaves both wife and children behind him when he emi¬ grates to the factory, and regularly returns to them to look after his family affairs and to rest from his labours. More than this, he can always find work in his village if he gets tired of the factory.”

With regard to the introduction of money-economy, another phase of the economic transition, it should be remembered that in many villages of modern India grain is still playing the part of money. The tenants are still paying the landlord in crop and not in money. The labourer in many villages is satisfied with the customary remuneration in grain. There can still be found many village

1 “ There is at present one very serious obstacle to the rapid development of the factory system. Labour is very difficult to secure. The Indian labourer does not readily adapt himself to new methods. In factories, in hand-loom workshops and in coal-mines there is the same complaint — that the wages are higher than can be earned any¬ where else, and yet there is a strange unwillingness to be tempted by them. In order to induce an Indian workman to enter a factory, he has to be allowed a freedom from discipline which softens the contrast with his older methods of work” (Prof. Lees Smith, “ India and Tariff Problem,” p. 24). Again, “ At the Ranigunge coal-mine the labourers Vill not, as a rule, work more than half the month. Though they could easily cut two tubs a day they are usually content with cutting one, and they take frequent holidays ” (Report of the Chief Inspector of Mines, 1905).

markets where a large number of purchases and sales is carried on without a single coin passing between the buyer and the seller. Especially in those parts of India where the influence of the village community is strong, grain transactions are the general rule. The labourers and artisans are all employed by the body of villagers and receive their wages in kind. These wages are altered with great difficulty. A remarkable proof of the fact that villages have not adopted money-economy is the disparity between prices in the towns and those in villages. Prices in villages still continue to remain more or less unaffected by fluctuations in the towns. Thus the middle-men and intermedi¬ aries often gain a good deal out of purchases in villages and sales for export. The ignorance of the villagers is sometimes regarded as the cause of the disparity of price-levels, but any one closely examining the village economy will find that it is not the ignorance of the villagers but the lack of connection between money prices and commodities in the village that accounts for the differences of prices in town and village.

Thus the Indian village has not universally adopted the economic methods and practices of the West. It has, on the other hand, shown a rigid adherence to her own organization. A study in this connection of the important socio-economic institutions of our country like the joint family and caste, and also of the standard of consumption of the average villager, which have tended to con¬ serve the economic order, and an examination how far western ideas and ideals have tended to modify them, will therefore be very interesting and useful.

Chapter III

The Hindu family, “joint in food, worship and estate,” is the economic unit of Hindu society. The family consists of the man and woman, their sons, grandsons, and great grandsons, who live in peace and harmony and share the common chest or purse.1 Founded on the virtues of affection and self-control, this system tends to develop a spirit of self-sacrifice, and mutual control and dependence, which are quite opposed to the competitive individualistic spirit, the key-note of modern industrialism. Indeed, the sentiment which it fostered and the economic effects it produced have led to certain fundamental differ¬ ences characteristic of our industrial life clearly distinguishing it from that of Europe and America. Thus, while in the West it is the individual’s own scale of wants, his standard of comforts and of activities which regulates the growth of population, in India the family mode of enjoyment or standard of life is the main factor. Marriage in Hindu society is compulsory at a particular age, so the

1 “The Hindu family is a group of individuals related to one another by their descent from a common ancestor within seven generations in the descending line ” (Bhattacharjee, “ The Law relating to the Joint-Family”). A well-known saying ascribes happiness in heaven to one who lives to see seven generations gathered under his roof.

fluctuations in prices of the crops have no such effects as in Europe, on the number of marriages. In Europe the check to the increase of population is competition, the struggle for food and its law, “ if a man will not work, neither shall he eat,” enforced upon the individual by society. In India the rigour of the law is mitigated in its operation by the family. The family protects the young wife, the helpless orphan or the decrepit grandfather. Thus state medical aid or old age pensions become unnecessary. The members of the family are assured maintenance not only for themselves but for as many children as they choose to bring into the world from the property ordained to be the hereditary source of maintenance for all. There are also theoretical restraints on the birth-rate which serve to prevent excess of popula¬ tion. These restraints are not economic but moral and religious, and are enforced by the family. Such restraints, however, are not now operating to any great extent. As in the case among the lower grades of society in England, the great bulk of the population of our country has no prudential checks. It seems that when the standard of comforts and of activities is low, the higher brain centres are in¬ active and the reproductive organs vigorous. The absence of higher intellectual activities which in¬ hibit reproduction is also accompanied by enfeebled vitality, due to poverty and economic stress, and such enfeebled vitality to a great extent encourages instead of checking the birth-rate.

The probable explanation according to the biologist is that an inadequate nutrition of the somatic tissues, within certain limits, promotes the activities of the repro¬ ductive organs. Thus the population increases, and this increase leads to poverty, which again promotes a further increase of the population ; and it is clear how the effects are intensified as this state of things goes on cumulatively until the process of degeneracy reaches a certain limit beyond which the stock seriously deteriorates. To this, if we add the consideration that Hindu society is dominated by the ideal of the family and paternal affection, we can easily see what results follow in our country. Indeed, the notion among the Hindus that it is the duty of each and every one of society to bring into the world at least one son, without whom not only he but all his forefathers will be without food and water in the next world, though appropriate to a race in its early stage of evolution, has now become unsuitable under present economic conditions. To the Hindu lawgivers family increase was associated with prosperity, for the Hindus in very early times when the codes were drawn up were surrounded by inimical tribes, most of whom, again, being Dravidians were matriarchal societies. Thus even now there is the strong prejudice in favour of the birth of sons, which, however, in face of the present relation of the population to the food supply is accompanied by baleful economic consequences. The population of India has increased threefold in the last century. This rate of increase, though small as compared to countries in Europe and America, is, indeed, high if we consider the agri¬ cultural and industrial conditions of our country, so that the only checks which now seem to operate are brought about by the very fact of over-popula¬ tion, viz., pestilence and famine. The want of staying as well as of resisting power in the physique,

c which is due to inadequate nourishment or suste¬ nance, consequent on over-population, is responsible to a great extent for the prevalence of malaria, plague, consumption and other diseases which are now fast spreading in the country.

But though the ideal of the joint-stock family has been unable to exercise its moral influence with regard to the population question, its ennobling effects on our socio-economic life, through its con¬ ception of the marriage relation, can hardly be over-estimated. In India marriage is a sacrament and its supreme object is to perpetuate a family, a patrimony and a faith. The consent of the family is necessary. Individual likes and dislikes are not of much importance ; for marriage is not a means of one’s individual pleasure or advantage, but the duty of transmitting an unimpaired estate and of maintaining the integrity of a family is the supreme consideration. And the family in main¬ taining a strong authority in its integrity does not allow economic considerations to stand in the way of a marriage. A man need not be very wealthy before marrying, for the family will support his wife and children, and the girl in the family organiza¬ tion is not left to shift for herself in the matrimonial market.1 Her father arranges the marriage and she finds assured maintenance provided for her as soon as she leaves her parents for her husband’s family on reaching maturity. Such a family presents a striking contrast with the unstable organization of

1 “A member, entitled to get the least share on partition, may by reason of having a large family of his own to support consume during jointness the large portion of the proceeds of joint property, without being liable to be called upon to account for the excess of consumption at the time of partition” (G. Sarkar’s “ Hindu Law,” p. 215).